People always want something. They want happiness, love, money, power and everything else. And they always want more and more. Especially money.
We need money for two main reasons. The first is to satisfy our basic needs («to avoid pain»), and the second is to fulfill our desires («to get pleasure»).
While the first is clear, the second is much more interesting.
It seems to me that people are more often unhappy not because they don't have what they need, but because they can't get the pleasures they want.
As Mahatma Gandhi said, «The world is big enough to satisfy any human need, but too small to satisfy human greed».
But even the wise ancient Greek Stoics understood how miserable a man becomes when he feels miserable because he does not have something. «A wise man is one who does not grieve for the things he does not have, but rejoices in what he has»(Epictetus).
And in the pursuit of increased income, we are less and less likely to think about how we manage our money. Sometimes I think people spend money just because they have it. And they don't even think about the benefits they get for it.
And, in fact, the usefulness of any good or service depends on the amount of money spent only up to a certain amount. So does the degree of pleasure.
Have you ever noticed that the more often you experience pleasure in something, the less it becomes? What, the more possessions, money, and companionship you have, the less you begin to appreciate it?
Rare experiences and acquisitions seem very valuable at first. But the more often you experience them, the more your satisfaction with them diminishes.
It may sound paradoxical, but the more money you have, the harder it is to spend. Spend it wisely. Conversely, the less money you have, the more efficiently you spend it.
Why does this happen?
Because there is such a thing as marginal utility.
Marginal utility is the utility a person gets from using one more additional unit of a good based on subjective estimates of their needs.
Marginal utility increases with a lack of the good and decreases with a surplus of the good. For example, for a hungry person, the marginal utility of the first bowl of soup is higher than the second, the second higher than the third. So it is with the other good.
This is confirmed by the first law of Gossen, discovered in 1854 by economist Gossen, according to which, during individual consumption of a certain good, the utility of each subsequent unit of it decreases, and at saturation reaches zero, that is, as the consumer increases the consumption of a good or service, the marginal utility of each additional unit of this good or service decreases.
Gossen's second law says that «a man gets the maximum pleasure in life if he distributes the money he earns among the various pleasures in such a way that the last atom of money spent on each pleasure yields the same amount of pleasure».
I'm not sure if low-income people are aware of this theory, but I think they manage their money much more efficiently. Have you ever noticed people who have less money but live better?
Rich people rarely think about this because the large sums of money they dispose of disguise, hide the real evaluation of the effectiveness of their use.
Yes, it is possible to earn a lot and get a lot. But as another law, the second Parkinson's Law formulated in The Law and The Profits, says, «expenses grow along with income».
So when you have more money, you automatically begin to spend more and usually less rationally, and with less benefit.
And it's not just about money. The less water and food you have on a long hike, the more efficiently you'll use it. The less time you have to do a certain job - the more productive you will be. The less time we have for the rest of our lives, the more we value it.
Or, if it applies to your business - when there is not much money in circulation, you will automatically run your business more carefully and frugally, getting more value for your money.
That's why healthy minimalism always works as a catalyst - for research, invention, and innovation. Because brains are busy not with how to spend, but how to earn.
And this was beautifully demonstrated by Henry Ford, without whom the United States would not be the country we know today. His attitude to resources - human, financial, time - was truly revolutionary.
His constant inventiveness (161 U.S. patents), his passion for reducing costs and increasing productivity enabled him to create a practical and inexpensive car that was accessible to ordinary people. His goal was not to maximize profits, as all capitalists do, but to produce as much product as possible - at the lowest possible price. Which meant more value for customers.
In the end, Ford not only created an opportunity to increase the production of cars, but also a social class that would buy those cars. Which, as a result, made him a fortune.
In reality, people's real need for money, things, and services is greatly exaggerated.
I'm not talking about saving money now. I'm talking about a more conscious attitude toward consumption and spending limited resources. And the more conscious, in any case, the better the result.
So, before you spend money, ask yourself - do you really need it? Or can you do without it?
Before you spend your time on something, ask yourself, is it worth it? Or are there better options?
We don't really need to acquire anything. We need to get rid of everything unnecessary, appreciate what we have, and don't spend money and time on things that have no true value or meaning to us.
